SKN | Wall Street Cuts Coinbase Targets After Q4 Miss — but Shares Surge 12%

Key Points:

• Coinbase shares jumped 12% despite missing fourth-quarter revenue and earnings expectations.
• Analysts lowered price targets, citing weaker transaction revenue and pressure on retail monetization.
• Wall Street highlighted growth in derivatives, stablecoins and subscription products as signs of a more diversified business model.

Shares of Coinbase rallied 12% on Friday even after the company reported a fourth-quarter earnings miss and several Wall Street firms slashed their price targets. The rebound reflects a market willing to look past near-term weakness in favor of Coinbase’s evolving business model and diversified revenue streams.

The company posted net revenue of $1.71 billion for the quarter, below consensus estimates of $1.81 billion. Adjusted EBITDA came in at $566 million, missing expectations of approximately $653 million. Under generally accepted accounting principles, Coinbase recorded a net loss of $667 million, largely driven by a $718 million unrealized loss on its crypto investment portfolio and a $395 million loss tied to strategic investments.

Analysts Flag Short-Term Pressures

Despite the post-earnings stock rally, analysts characterized the quarter as broadly disappointing. Benjamin Budish of Barclays described the results as “a miss across the board,” pointing to softer transaction and subscription revenue along with elevated operating expenses.

Budish reduced his price target to $149 from $258, noting that trading activity, stablecoin-related interest income and crypto asset prices remain the dominant drivers of Coinbase’s performance. He emphasized that revenue sensitivity to market conditions continues to expose the company to volatility in crypto prices and retail engagement.

Similarly, Owen Lau of Clear Street cut his price target to $277 from $344, highlighting pressure on consumer monetization. The retail take rate declined from 1.43% in the third quarter to 1.31% in Q4, reflecting a shift toward advanced trading tools and the Coinbase One subscription model. While the lower take rate reduced per-trade revenue, Lau noted it may support longer-term customer retention and cross-selling opportunities.

Diversification Offsets Cyclical Weakness

Even as price targets were lowered, several analysts underscored structural improvements within Coinbase’s business. Mark Palmer of Benchmark maintained a buy rating, though he reduced his target price to $267 from $421.

Palmer cited Coinbase’s expanding derivatives platform, stablecoin infrastructure and broader product suite as evidence the company is becoming more diversified and resilient. He pointed to growth in Coinbase’s share of the USDC market capitalization and an expanding Coinbase One subscriber base as positive signals.

The exchange now reports 12 business lines generating more than $100 million in annualized revenue, including two exceeding $1 billion. Its base-layer network initiatives, derivatives trading operations and stablecoin services suggest a gradual pivot away from reliance solely on spot trading fees.

Capital Strength and Strategic Flexibility

Management reiterated its commitment to remaining adjusted EBITDA positive across market cycles, supported by $14.1 billion in total available resources. Coinbase continues to repurchase shares, reducing its share count by roughly 8% quarter-over-quarter, and said it is accumulating bitcoin using a portion of operating income.

The combination of capital strength, share buybacks and strategic reinvestment may have reassured investors, helping explain the stock’s rally despite the earnings miss.

Market Interpretation

The divergence between analyst caution and market enthusiasm highlights a broader dynamic in crypto equities. Investors appear willing to discount short-term volatility if they see credible long-term positioning.

While Coinbase remains sensitive to crypto price cycles, the growth of derivatives, subscriptions and stablecoin infrastructure could gradually smooth earnings volatility. For now, however, the company remains tightly tethered to market sentiment and retail participation trends.

The stock’s rally suggests investors are betting that diversification efforts will outweigh cyclical headwinds — even as Wall Street trims expectations in the near term.